MITEK SYSTEMS INC

Overview

Mitek Systems, Inc. (“Mitek,” the “Company,” “we,” “us,” and “our”) is a pioneer in mobile image capture and a global provider of solutions in the fraud prevention, digital identity verification, and cybersecurity markets. Our products address the increasing sophistication of fraud in areas such as new account openings, digital account access, and payments. Utilizing artificial intelligence, computer vision, and proprietary biometrics, our enterprise-grade verification tools protect organizations from escalating check fraud, ongoing account opening fraud, and new cyber threats such as deepfakes and voice clones.

Mitek’s Mobile Check Deposit product is trusted by consumers for its convenience and accuracy verifying checks for deposit, facilitating approximately 1.2 billion transactions annually. This solution powers secure, fast, and convenient deposit services for many organizations, enhancing consumer experience.

We serve over 7,900 financial services organizations, financial technology (“fintech”) brands, telecommunications companies, and marketplace brands globally. Our verification and fraud detection technology is embedded directly within mobile and web applications, providing seamless verification at every touchpoint in the customer lifecycle. By equipping banks, marketplaces, and fintech platforms with these tools, we help reduce the costs associated with fraud, impersonation, Know Your Customer (“KYC”) and anti-money laundering (“AML”) compliance. Additionally, our solutions improve the customer experience, help to ensure regulatory compliance, and lower operational costs.

Expanding Expertise Through Strategic Acquisitions

To strengthen our portfolio and enhance security across all stages of the digital customer journey, in 2021 Mitek acquired ID R&D, Inc., a provider of AI-driven voice and face biometrics and liveness detection technologies. This acquisition significantly expanded Mitek’s capabilities for identity verification to include passive multimodal authentication needed for multiple touch points in the digital lifecycle of a consumer. Our acquisition of HooYu Ltd. in 2022 further bolstered our identity verification leadership through both KYC capabilities and rapid orchestration capabilities, linking biometrics with real-time data aggregation across credit bureaus, sanctions lists, and law enforcement databases. These strategic integrations enable Mitek to provide a comprehensive, single-source identity verification and fraud prevention solution that adapts to the sophisticated fraud landscape of today.

Addressing a Rapidly Evolving Cybersecurity and Fraud Landscape

With generative AI’s rise, the financial sector faces unprecedented challenges, as deepfake and voice cloning technologies create new risks. To meet these threats, Mitek’s identity verification solutions now integrate new forms of manipulation detection to counter advanced, AI-driven fraud tactics by detecting digital manipulation, including artifacts from deepfake engines and signs of visible tampering. We continue to innovate with automated and layered security features to effectively address emerging risks.

Global Reach and Trusted Partnerships

Mitek’s identity verification solutions are marketed and delivered worldwide through a blend of direct sales teams in the North America and Europe, and through channel partnerships with leading financial services and identity verification providers. These partners embed Mitek solutions into their platforms, amplifying our ability to meet the needs of their customers and helping establish Mitek as the trusted backbone for identity security across high-risk industries.

Vision and Differentiation

Driven by a vision of providing trust and convenience through every digital interaction, Mitek enables organizations to protect themselves and their customers amid a challenging and rapidly evolving fraud and cyber landscape. With recognized expertise and a broad portfolio, from mobile deposit capture to advanced AI-enabled identity verification and authentication, Mitek remains committed to leading the way in securing high-risk sectors from checks to deepfakes. Trusted by banks the world over, fintech platforms and telecommunication providers, Mitek combines proven experience with innovative technology to secure the future of digital transactions, empowering organizations to stay ahead of fraud and cyber threats.

Product and Technology Overview

Technology

Our digital technology solutions are provided in two parts: (i) as software development kits for mobile image or voice pattern capture and (ii) a cloud software platform which uses artificial intelligence and machine learning to classify and extract data to enable mobile check deposit as well as aid the authentication of documents including checks, passports, identity cards, and driver's licenses using a camera-equipped device.

Our technology uses patented algorithms that analyze images of documents in many ways. These include image quality analysis, image repair and optimization, document identification and classification, data extraction, and numerous authenticators.

Products

Mobile Deposit®

Mitek’s Mobile Deposit® is used today by millions of consumers in the United States (“U.S.”) and Canada for mobile check deposit. Mobile Deposit® enables individuals and businesses to remotely deposit checks using their camera-equipped smartphone or tablet. Mobile Deposit® is embedded within the financial institutions’ digital banking apps used by consumers and now processes more than one billion check deposits annually. Mitek began selling Mobile Deposit® in early 2008 and received its first patent for this product in August 2010.

Mobile Deposit® allows consumers to capture photographs of the front and back of a check and then remotely deposit the check all within their financial institution’s mobile banking app. Mitek delivers a simple and easy user experience with our proprietary mobile automatic capture which assists users in capturing a high quality image of a check by holding their mobile device over the check.

Check Fraud Defender

Check Fraud Defender is an advanced AI-powered, cloud-hosted consortium designed to combat check fraud by leveraging Mitek’s proprietary check image science. It analyzes over 24 distinct visual elements of checks submitted by participating banks, enabling the detection of visual anomalies and potential fraud. This comprehensive analysis helps banks reduce fraud-related losses and enhances their ability to protect both the institution and its customer.

Mitek Verified Identity Platform (“MiVIP®”)

MiVIP® is an advanced, end-to-end identity verification solution designed to address the increasing demands for seamless, secure, and scalable KYC process that helps companies quickly design, build, and deploy robust KYC journeys with little or no development resources. MiVIP® combines facial biometrics, liveness detection, ID document validation, database checks, geolocation, digital footprint analysis, and more to provide the clearest picture of who is requesting access to a business’ services. This multi-layered approach ensures comprehensive protection against fraud, enabling businesses to verify identities with precision while mitigating sophisticated threats, including synthetic identities and deepfakes.

A key differentiator of MiVIP is its focus on enhancing the user experience. The platform supports omni-channel journeys, allowing users to seamlessly transition between devices—mobile, desktop, or others—without losing progress. This flexibility minimizes friction, making it ideal for diverse industries, including financial services, telecommunications, and e-commerce. MiVIP further empowers businesses by offering modular, scalable solutions that can adapt to the unique needs of highly regulated environments. By combining advanced security features, streamlined deployment, and user-friendly design, MiVIP exemplifies Mitek's commitment to delivering a trusted and comprehensive identity verification platform that empowers organizations to protect their customers and their ecosystems.

Mobile Verify®

Mobile Verify® is an Identity Document Verification (“IDV”) solution that can be integrated into mobile apps, mobile websites, and desktop applications. Mobile Verify® combines an optimal image capture experience with our leading document authentication technology — helping our customers validate an identity document presented in a digital transaction is genuine and unaltered. Adding a second layer for identity proofing, Mobile Verify® matches the portrait extracted from the identity document with a selfie of its presenter by doing a biometric face comparison.

The Mobile Verify® identity verification engine is a modular cross-platform architecture that uses machine learning and advanced computer vision algorithms. To achieve the highest accuracy rates, Mitek’s technology was conceptualized to verify the authenticity of an identity document in the following systematic approach:

•Guided document capture, enabling users to take a quality photo for optimal processing;

•Document classification computer vision algorithms that recognize and classify thousands of diverse identity documents from around the world allowing for reliable data extraction;

•Data extraction that goes beyond traditional Optimal Character Recognition (“OCR”) to deconstruct the document and analyze the content of each field; and

•Evaluation of authenticity elements, using a combination of machine learning techniques and unique computer vision algorithms to help determine the authenticity of a document.

MiSnap™

Mitek MiSnap™ is a patented mobile-capture software development kit (“SDK”) that enables an intuitive user experience and instant capture of quality images of identity documents and checks. The key to successful mobile check deposit, data pre-fill and ID document verification is the quality of the image capture. Mitek's MiSnap™ helps enable every user to capture a quality image the first time.

CheckReader™

CheckReader™ enables financial institutions to automatically extract data from checks once they have been scanned or photographed by the application. Easily integrated into mobile and server-based applications providing automatic image pre-processing and recognition capabilities, CheckReader™ allows for the automatic recognition of all fields on checks and generic payments documents, whether handwritten or machine printed. CheckReader™ is utilized as a core component throughout a wide range of check processing applications, including ATMs, centralized and back office processes, remittance, merchants, and fraud applications. CheckReader™ is deployed worldwide in over forty countries.

Check Intelligence

Check Intelligence enables financial institutions to automatically extract data from a check image received across any deposit channel—branch, ATM, remote deposit capture, and mobile. Through the automatic recognition of all fields on checks, whether handwritten or machine printed, Check Intelligence speeds up the time to deposit for banks and customers and helps enable financial institutions to comply with check clearing regulations. With built-in image quality analysis and image usability analysis, Check Intelligence also ensures that the check meets the Check Clearing for the 21st Century Act (Check 21) requirements and other industry and regulatory standards.

MiPass®

MiPass® is a next-generation authentication solution combining advanced facial and voice biometrics with passive liveness detection to safeguard against sophisticated fraud techniques such as deepfakes, synthetic identities, and identity theft. As traditional passwords become increasingly vulnerable and cumbersome for users, MiPass transforms the authentication process by offering a seamless, secure alternative that eliminates the need for passwords and one-time passcodes.

MiPass® is uniquely differentiated by its ability to provide multimodal biometric authentication that is easy to implement and integrate into existing platforms. This flexibility ensures organizations can enhance security without compromising customer experience. The platform's passive liveness detection further elevates its defenses, making it resistant to even the most sophisticated fraud attempts. Recognized for its innovation and market leadership, MiPass has received multiple industry accolades, including awards for excellence in biometric technology and fraud prevention.

IDLive® Face

The IDLive® is the industry’s first passive facial liveness detection product, essential for frictionless fraud prevention in face biometrics for authentication and digital identity proofing. It is iBeta Levels 1 and 2 Presentation Attack Detection (PAD) compliant and processes millions of transactions monthly for customers worldwide. IDLive® Face has been recognized as a top performer in the NIST facial presentation attack detection evaluations, affirming its leadership in security and convenience. Most recently, the product achieved unparalleled industry-leading liveness results in U.S. Homeland Security evaluation of Remote Identity Validation Systems.

IDVoice®

IDVoice® is a robust AI-driven voice biometric engine that enables fast, convenient authentication on mobile, web, and telephone channels. The product is also optimized to enable embedded security and personalization on Internet of Things devices. IDVoice® has achieved top rankings in the industry’s leading benchmark challenges.

IDLive® Voice

IDLive® Voice helps stop spoofing attacks on voice biometric systems by distinguishing live voice from synthesized speech, voice deepfake clones, and recordings.

IDLive® Voice Clone Detection

IDLive® Voice Clone Detection works as a classifying system distinguishing human voices from synthesized speech, voice deepfake clones, and text to speech capabilities. It can detect voice clones in both presentation and more complex injection attacks in under three seconds.

IDLive Doc™

The IDLive Doc™ works to fight fraud related to digitally displayed document images. This AI-based product validates the physical presence of documents used when verifying customer identities online. The product can be added to any onboarding or electronic KYC solution, providing another layer of fraud prevention for banks, gig economy companies, telecom companies, and others.

Sales and Marketing

We derive revenue predominately from the sale of licenses (to both our on premise and transactional software as a service (“SaaS”) products) and transaction fees to use our products, and to a lesser extent by providing maintenance and professional services for the products we offer. The revenue we derive from the sale of such licenses is derived from both the sale to our channel partners of licenses to sell the applications we offer as well as the direct sale of licenses and services to customers.

We have an internal marketing group that develops corporate and digital marketing strategies. The internal team executes these strategies with the help of external resources as needed to support both direct sales and channel partners’ sales efforts.

Intellectual Property

Our success depends in a large part upon our proprietary technology. We attempt to protect our intellectual property rights primarily through a combination of patents, copyrights, trademarks, trade secrets, employee and third-party non-disclosure agreements, and other measures. We believe that factors such as the technological and creative skills of our personnel, new product development, frequent product enhancements, name recognition, and reliable product maintenance are essential to establishing and maintaining a technological leadership position. There can be no assurance that our means of protecting our proprietary rights in the U.S. or abroad will be adequate. We seek to protect our software, documentation, and other written materials under trade secret and copyright laws, which afford only limited protection. Further, there can be no assurance that our patents will offer any protection or that they will not be challenged, invalidated, or circumvented. If we are unable to protect our intellectual property, or we infringe on the intellectual property rights of a third-party, our operating results could be adversely affected.

As of September 30, 2024, the U.S. Patent and Trademark Office has issued us 107 patents with expiration dates ranging from 2024 through 2041 and we have filed for 20 additional domestic and international patents. In addition, we generally enter into confidentiality agreements with certain employees.

Market Opportunities, Challenges & Risks

We believe that financial institutions, fintech platforms, and other companies see our patented solutions as a way to provide a superior digital customer experience to meet growing consumer demands of trust and convenience online and, at the same time, assist them in meeting regulatory requirements. The value of digital transformation to our customers is a possible increase in top line revenue and a reduction in the cost of sales and service. As the use of new technology increases, so does associated fraud and cyber-attacks. The negative outcomes of fraud and cyber-attacks encompass financial losses, brand damage, and loss of loyal customers, which we predict will lead to growth in demand for identity verification and sophisticated fraud detection, prevention and management products.

Factors adversely affecting the pricing of, or demand for, our digital solutions, such as competition from other products or technologies, any decline in the demand for digital transactions, or negative publicity or obsolescence of the software environments in which our products operate, could result in lower revenues or gross margins. Further, because substantially all of our revenues are from a few types of technology, our product concentration may make us especially vulnerable to market demand and competition from other technologies, which could reduce our revenues.

The sales cycle for our software and services can be lengthy and the implementation cycles for our software and services by our channel partners and customers can also be lengthy, often as long as six months and sometimes longer for larger customers. If implementation of our products by our channel partners and customers is delayed or otherwise not completed, our business, financial condition, and results of operations may be adversely affected.

Revenues related to most of our on premise licenses for mobile products are required to be recognized up front upon satisfaction of all applicable revenue recognition criteria. Revenue related to our SaaS products is recognized ratably over the life of the contract or as transactions are used depending on the contract criteria. The recognition of future revenues from these licenses is dependent upon a number of factors, including, but not limited to, the term of our license agreements, the timing of implementation of our products by our channel partners and customers, and the timing of any re-orders of additional licenses and/or license renewals by our channel partners and customers.

During each of the last few years, sales of licenses to one or more channel partners have comprised a significant portion of our revenue each year. This is attributable to the timing of renewals or purchases of licenses and does not represent a dependence on any single channel partner. If we were to lose a channel partner relationship, we believe either we or another channel partner could sell our products to the end-users that had purchased products from the channel partner we lost. However, in that case, we or another channel partner must establish a relationship with the end-users, which could take time to develop.

We have a growing number of competitors in the mobile image capture and identity verification industry, many of which have greater financial, technical, marketing, and other resources. However, we believe our patented mobile image capture and identity verification technology, our growing portfolio of products and coverage for the financial services industry and our market expertise gives us a distinct competitive advantage. To remain competitive, we will continue to offer products that are attractive to the consumer as well as being compliant, accurate, and convenient. To help us remain competitive, we intend to further our investment in research and development as well as partnering with other technology providers.

Competition

The market for our products and solutions is highly competitive, subject to rapid change, and significantly affected by the introduction of new products or technologies and other market activities of industry participants. We face direct and indirect competition from a broad range of competitors who offer a variety of products and solutions to our current and potential customers. Our principal competition comes from: (i) customer-developed solutions; (ii) companies offering alternative methods of identity verification; (iii) companies offering competing technologies capable of mobile remote deposit capture or authenticating identity documents and facial photo comparison; and (iv) alternate forms of user authentication, including face and voice recognition.

It is also possible that we will face competition from new industry participants or alternative technologies. Moreover, as the market for automated document processing, image recognition and authentication, check imaging, and fraud detection software develops, a number of companies with significantly greater resources than we have could attempt to enter or increase their presence in our industry, either independently or by acquiring or forming strategic alliances with our competitors, or otherwise increase their focus on the industry, or reshape the market through pricing or other innovations. In addition, current and potential competitors have established or may establish cooperative relationships among themselves or with third parties to increase the ability of their products to address the needs of our current and potential customers.

Our products are compliant with Service-Oriented Architecture standards and compete, to various degrees, with products produced by a number of substantial competitors. Competition among product providers in this market generally focuses on price, accuracy, reliability, global coverage, and technical support. We believe our primary competitive advantages in this market are: (i) our mobile auto image capture user experience used by millions of consumers; (ii) our patented data science; (iii) scalability; and (iv) an architectural software design that allows our products to be more readily modified, improved with added functionality, and configured for new products, thereby allowing our software to be easily upgraded.

Increased competition may result in price reductions, reduced gross margins, and loss of market share, any of which could have a material adverse effect on our business, operating results, and financial condition.

Research and Development

We develop software products internally and also purchase or license rights to third-party intellectual property. We believe that our future success depends in part on our ability to maintain and improve our core technologies, enhance our existing products, and develop new products that meet an expanding range of customer requirements.

Internal research and development allows us to maintain closer technical control over our products and gives us the ability to determine which modifications and enhancements are most important and when they should be implemented to ensure the proper functioning and improved performance of our products. We intend to expand our existing product offerings and introduce new mobile image capture and digital identity verification capabilities that meet a broader set of needs of our customers. We intend to continue to support the major industry standard operating environments.

Our research and development organization includes software engineers and scientists, many of whom have advanced degrees, as well as additional personnel in quality assurance and related disciplines. All our scientists and software engineers are involved in product development.

The development team includes specialists in artificial intelligence, computer vision, software engineering, user interface design, product documentation, product management, and quality assurance. The team is responsible for maintaining and enhancing the performance, quality, and utility of all of our products. In addition to research and development, our engineering staff provides customer technical support on an as-needed basis.

Variability and Quarterly Results

Occasionally, the timing of large one-time orders, such as those associated with large customer refresh cycles or significant volume rollouts, creates variability in our quarterly results.

Government Regulation

As a company with global operations, we are subject to the laws of the United States and multiple foreign jurisdictions in which we operate and the rules and regulations of various governing bodies, which may differ among jurisdictions. For additional information, see the risk factors herein in “Item 1A. Risk Factors” and the subheading “Risks Related to Regulation and Compliance.”

Human Capital Resources

As of September 30, 2024, we had 630 employees, 178 in the U.S. and 452 internationally, 565 of which are full time. Our total employee base consists of 318 sales and marketing, professional services, and document review employees, 229 research and development and support employees, and 83 employees in executive, finance, network administration, and other capacities. In addition, we engaged various consultants in the areas of research and development, product development, finance, and marketing during fiscal year 2024. We have never had a work stoppage and none of our employees are represented by a labor organization. Substantially all of our employees, other than a certain number of our executive officers and employees with customary employment arrangements within Europe, are at will employees, which means that each employee can terminate his or her relationship with us and we can terminate our relationship with him or her at any time. We offer industry competitive wages and benefits and are committed to maintaining a workplace environment that promotes employee productivity and satisfaction. We consider our relations with our employees to be good. We are also focused on understanding our diversity and inclusion strengths and opportunities and executing on a strategy to support further progress.

Available Information

We are subject to the reporting requirements of the Exchange Act. Consequently, we are required to file reports and information with the SEC, including reports on the following forms: annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. These reports and other information concerning us may be accessed, free of charge, through the SEC’s website at www.sec.gov and our website at www.miteksystems.com. These reports are placed on our website as soon as reasonably practicable after they are filed with the SEC. Information contained in, or that can be accessed through, our website is not incorporated by reference into, nor is it in any way a part of, this Form 10-K.